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Editorial - ‘Internet cafés’ flourish despite ban, but they must follow local regulations

Published: Tuesday, October 2, 2012 at 7:10 p.m.

Last Modified: Tuesday, October 2, 2012 at 7:10 p.m.

If we must tolerate commercial gambling dens, then at the very least they should be expected to follow our rules – and pay for the privilege of locating in our communities.

But some of these businesses that have failed to comply with the rules are now asking the Wilmington City Council to go easy on them and give them more time. They’ve had two years to meet the requirements set by the council in 2010 when it became clear that a state ban on these establishments had legal loopholes that may never be fully plugged.

But at least for the time being, cities and counties have some control over where these “sweepstakes parlors” and “Internet cafes” locate. They also have the right to collect fees based on the number of machines each operates.

In Wilmington, where at one point sweepstakes parlors were popping up throughout the city, regulatory control has helped reduce their proliferation. The council began charging a privilege fee of $2,000 to $3,000 per machine, which some businesses have not paid. The city also treated like other adult businesses, relegating them to certain zones and keeping them an acceptable distance from schools, churches and other religious institutions., parks, day-care centers and other sweepstakes parlors.

Now the grace period the council established has come to a close for most of the 13 sweepstakes businesses operating within the city limits. Some of the operators say the rules are too strict and need more time to find adequate accommodations.

The council should consider each extension request carefully, and on its own merits. Some council members want to see financial records as proof of hardship; this carries potential legal problems but could be a show of good faith by a business.

The refusal by some to comply with city regulations and fees does not speak well of the gaming industry’s insistence that well-regulated and taxed sweepstakes businesses would be cash cow and all-around positive thing for North Carolina.

Technically, video poker and other forms of electronic gambling are illegal in North Carolina, although industry lobbyists continue to push lawmakers to throw open the doors to legalized gambling. Their lawyers have been busy, too, and the courts have so far agreed with many of their arguments.

Mostly, objections to the state ban have cited North Carolina’s agreement with the Cherokee nation allowing a casino on tribal grounds, the state’s own foray into gambling in the form of the philanthropically named “Education Lottery” and the prickly legal question of prohibiting sweepstakes businesses where patrons ostensibly pay for “Internet time” rather than specifically to gamble.

So far – and admirably – the Republican-dominated General Assembly has been reluctant to take up bills that would legalize the establishments outright. But promoters of this sort of business are ruthless in their efforts to establish a permanent home in North Carolina and will continue to use the courts to keep its foot in our door. The industry also has offered to write its own regulations.

Under no circumstances should the people who promote gambling be allowed to determine the rules these businesses must live by, or to oversee them. If they must be permitted, however, the communities where they locate must retain ample authority to regulate them – and to enforce those rules.

<p>If we must tolerate commercial gambling dens, then at the very least they should be expected to follow our rules – and pay for the privilege of locating in our communities.</p><p>But some of these businesses that have failed to comply with the rules are now asking the Wilmington City Council to go easy on them and give them more time. They've had two years to meet the requirements set by the council in 2010 when it became clear that a state ban on these establishments had legal loopholes that may never be fully plugged.</p><p>But at least for the time being, cities and counties have some control over where these “sweepstakes parlors” and “Internet cafes” locate. They also have the right to collect fees based on the number of machines each operates.</p><p>In Wilmington, where at one point sweepstakes parlors were popping up throughout the city, regulatory control has helped reduce their proliferation. The council began charging a privilege fee of $2,000 to $3,000 per machine, which some businesses have not paid. The city also treated like other adult businesses, relegating them to certain zones and keeping them an acceptable distance from schools, churches and other religious institutions., parks, day-care centers and other sweepstakes parlors.</p><p>Now the grace period the council established has come to a close for most of the 13 sweepstakes businesses operating within the city limits. Some of the operators say the rules are too strict and need more time to find adequate accommodations.</p><p>The council should consider each extension request carefully, and on its own merits. Some council members want to see financial records as proof of hardship; this carries potential legal problems but could be a show of good faith by a business.</p><p>The refusal by some to comply with city regulations and fees does not speak well of the gaming industry's insistence that well-regulated and taxed sweepstakes businesses would be cash cow and all-around positive thing for North Carolina.</p><p>Technically, video poker and other forms of electronic gambling are illegal in North Carolina, although industry lobbyists continue to push lawmakers to throw open the doors to legalized gambling. Their lawyers have been busy, too, and the courts have so far agreed with many of their arguments.</p><p>Mostly, objections to the state ban have cited North Carolina's agreement with the Cherokee nation allowing a casino on tribal grounds, the state's own foray into gambling in the form of the philanthropically named “Education Lottery” and the prickly legal question of prohibiting sweepstakes businesses where patrons ostensibly pay for “Internet time” rather than specifically to gamble.</p><p>So far – and admirably – the Republican-dominated General Assembly has been reluctant to take up bills that would legalize the establishments outright. But promoters of this sort of business are ruthless in their efforts to establish a permanent home in North Carolina and will continue to use the courts to keep its foot in our door. The industry also has offered to write its own regulations.</p><p>Under no circumstances should the people who promote gambling be allowed to determine the rules these businesses must live by, or to oversee them. If they must be permitted, however, the communities where they locate must retain ample authority to regulate them – and to enforce those rules.</p>